NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed all rated classes of J.P. Morgan Chase Commercial Mortgage Securities Trust 2012-HSBC (JPMCC 2012-HSBC). A full list of rating actions follows at the end of this release.
KEY RATING DRIVERS
The affirmation is based on the stable performance of the underlying trust asset. As of the June 2015 remittance, physical occupancy has stabilized as expected at issuance. The loan has 24 months left in its interest-only period, which was for the first five years of the ten year term.
The Rating Outlook for all classes remains Stable. No near-term rating actions are expected unless there are material changes to the property occupancy and cash flow.
HSBC Tower is a 30-story, 865,339 square foot (sf), high-rise office building located in the Grand Central submarket in midtown Manhattan. The three largest tenants are HSBC (60%), Baker & McKenzie (12%),and Man Investments Holding Inc (6%), with lease expirations in 2020, 2028, and 2022; respectively. The property at issuance was 92% leased, with some tenants awaiting the build out of their units; however, all tenants are currently in place. As of the March 2015 rent roll, the property is 98.7% occupied with average rents at $59 sf. Per REIS as of 1st quarter (1Q) 2015, the Grand Central submarket Class A office vacancy is 9% with average asking rent $81 sf. As of year-end (YE 2014) the servicer reported debt service coverage ratio (DSCR) on a net cash flow basis is 1.97x compared to 1.68x at issuance.
The loan at issuance was structured with a hard lockbox and both ongoing and upfront reserves. Reserves account for current and future expenses for leasing costs and capital expenditures, as well as upfront reserves to cover ongoing capital improvements and free rent. A rollover reserve of $1.25 million per annum is in place for HSBC as is a cash flow sweep that will be triggered 30 months prior to HSBC's lease expiration. The current balance of the leasing reserve and replacement reserve as of June 2015 are $4,355,918 and $72,249; respectively.
Fitch has affirmed the following ratings:
--$200,000,000 class A at 'AAAsf'; Outlook Stable;
--Interest-only class X-A* at 'AAAsf'; Outlook Stable;
--Interest-only class X-B** at 'BBB-sf'; Outlook Stable;
--$15,000,000 class B at 'AAsf'; Outlook Stable;
--$21,400,000 class C at 'Asf'; Outlook Stable;
--$58,600,000 class D at 'BBB-sf'; Outlook Stable;
--$5,000,000 class E at 'BBB-sf'; Outlook Stable.
Additional information is available at www.fitchratings.com.
Criteria for Analyzing Large Loans in U.S. Commercial Mortgage Transactions (pub. 20 Mar 2015)
Global Structured Finance Rating Criteria (pub. 31 Mar 2015)
Dodd-Frank Rating Information Disclosure Form